This landmark partnership between Ghana International Bank (GHIB) and British International Investment (BII), two prominent UK-based institutions, marks a significant step towards addressing the pressing trade finance gap in Africa. The $50 million trade finance facility, structured under a Master Risk Participation Agreement (MPRA), targets seven key economies across the continent: Sierra Leone, Liberia, The Gambia, Benin, Democratic Republic of Congo, Rwanda, and Tanzania. This initiative aims to bolster trade flows and empower local businesses in these often-overlooked markets, fostering economic growth and improving access to essential goods and services.
The facility directly confronts the prevalent reluctance of financial institutions to extend credit to frontier markets in Africa. This hesitation often stems from perceived high risks and comparatively lower trade volumes. By injecting crucial capital into these economies, the GHIB-BII partnership seeks to mitigate these concerns and unlock the potential of these markets. This injection of funds will enable local businesses to import vital commodities and equipment, fueling their growth and contributing to overall economic development. Importantly, the facility will also help ensure a consistent supply of essential goods for local populations at affordable prices.
This collaboration leverages the distinct strengths of both GHIB and BII. GHIB, with its extensive network and deep understanding of African markets honed over 65 years of operation, brings valuable expertise in navigating the complexities of trade finance on the continent. BII, as the UK’s development finance institution, contributes its considerable financial resources, including crucial foreign exchange dollar liquidity, essential for facilitating imports in the target markets. This combined expertise and financial firepower create a synergistic partnership well-positioned to tackle the trade finance challenges in these emerging economies.
The UK government has expressed strong support for this initiative, recognizing its potential to strengthen economic ties between the UK and Africa. Lord Collins of Highbury, the UK’s Minister for Africa, lauded the partnership as a prime example of BII’s leadership in fostering growth opportunities with the UK’s partners. The Minister highlighted the critical role of addressing Africa’s trade finance gap in unlocking the continent’s economic potential and facilitating increased trade with the UK.
Both GHIB and BII leadership have emphasized the significance of this partnership. Kwabena Asante-Poku, BII’s Country Director for Ghana, underscored the importance of trade as a driver of growth in African economies, particularly in frontier markets. He highlighted the vital role of enhanced trade credit and financial intermediation in ensuring access to essential goods and services, ultimately leading to sustainable and inclusive economic growth. Dean Adansi, CEO of GHIB, emphasized the bank’s deep understanding of African risk and how this partnership strategically leverages this knowledge to structure impactful and profitable transactions. He noted the potential for this deal to unlock significant GDP growth, citing research indicating that each dollar of trade can generate $1.3 in GDP within their target markets.
This collaborative effort between GHIB and BII signifies more than just a financial transaction; it represents a strategic investment in the future of African trade. By addressing the trade finance gap in these key economies, the partnership aims to catalyze economic growth, create opportunities for local businesses, and improve the lives of people across the continent. This initiative serves as a model for future collaborations, demonstrating the power of combining expertise and resources to tackle complex development challenges and build stronger economic ties between the UK and Africa. The success of this partnership holds the potential to unlock further investment and drive sustainable, inclusive growth in these dynamic and often underserved markets.
